Luxury-box purchase inspires calls for scrutiny of insurer’s expenses

By Russ Britt

Bloomberg

Luxury box area of San Francisco 49ers’ new home at Levi’s Stadium in Santa Clara, Calif.

Will government officials begin scrutinizing expenditures made by health-insurance companies? They just might, if a dispute involving one of California’s major insurers, Blue Shield of California, is any indication.

The nonprofit insurer’s decision to purchase a luxury box at the San Francisco 49ers’ new facility, Levi’s Stadium in Santa Clara, Calif., has drawn the wrath of at least one consumer group.

Consumer Watchdog is calling on California Attorney General Kamala Harris to examine Blue Shield’s purchase, which the consumer group estimates will cost anywhere between $2.5 million and $8 million. It’s part of a broader plan by the organization to pass Proposition 45, a ballot initiative that would give insurance regulators the power to block excessive rate increases.

Officials from Harris’s office declined to comment on the issue and wouldn’t say whether they are looking into the matter.

For its part, the insurer says the luxury box is geared toward customers.

“The purchase of the box and season tickets at Levi’s Stadium was a business decision that allows us to host customer events. The box is not available to senior executives for personal use,” the insurer said in a prepared statement.

But Consumer Watchdog says Blue Shield has benefited from what it calls “generous” tax breaks that it receives as a nonprofit entity. Blue Shield also has a reserve of nearly $3.7 billion that far exceeds the minimum requirement under state law. For those reasons, the group is asking Harris to impose a charitable trust on Blue Shield’s assets.

The issue was noted in a San Francisco Chronicle column last week. The 49ers will begin their first season in the new facility on Sept. 7. It’s located roughly 45 minutes from the football team’s old home at Candlestick Park.

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